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If it ticks all the boxes, watch out for the ‘Wow’ factor
Usually a bridging loan does not have anything to do with borrowing money to purchase a bridge. No, usually a bridging loan is what you desperately want when you’ve found a new home which is terrifically better than the terrific house you’re trying to offload, but can’t.
You can possibly see a pitfall just by reading the above. It’s the word ‘desperately’. When you’ve found the next ‘house of your dreams’ you want to grab it quick, make it yours, cut out the competitors etc.
In that frame of mind you’ll be ready to sign up for whatever deal helps you get it. But be careful before you dive in. These loans are expensive and are usually considered to be a last resort.
You will probably end up with a mortgage and a bridging loan and have to pay off both loans at once. Expert advice says you not use a bridging loan simply as a way of beating property chain problems.
However a bridging loan can tide you over in the short term and the extra expense may save you from losing money already spent in the purchase process, as well as reducing stress. But if you do it for the wrong reasons you may end up in financial difficulty which, when you look at the consequences, may elicit a rather large ‘Wow’.
January 17, 2009 at 6:35 pm | Bridging Finance | No comment
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